Special Risk Capital Management LLC

Green Shoots ? May 23, 2014

OK it’s Spring, and Summer is ’bout ready to begin (hopefully in earnest).  Trees are budding and plants are growing . . why not the market?  Well, this week I’ve started (just the beginning) to see some hopeful signs.  Market “internals” (advances vs. declines, up volume vs. down, # of new highs vs. lows, etc.) are slowly improving and price momentum is also doing better.  As you can see in the chart below we just hit the upper trading range today (Friday, 4185-ish).

Now volume was low, but that maybe OK.  It was a Friday before a holiday weekend an low volume is not necessarily “bad”.  We’ll need to see follow thru next week with prices moving higher and volume slowing picking up, but the last three days were positive (decent range bars closing near the high for the day).

Also note that growth and small cap stocks were stronger this week than the large cap / Dow stocks.  Perhaps early signs that investors are finding reasons to get back into growth.  IF this turns out to be a rally, likely it will be more selective than in the past.  Last year the “rising tide lifted all boats” but the rest of this year will likely be more difficult.  A “stock pickers market”.  OK, that’s fine with me, nothing we can’t see, detect and respond to.

So let’s give these (possible) “green shoots” another week to sprout.  That should provide us with a better handle on the intermediate trend.

Enjoy the holiday, take care.    ….. Tom  ….